Most of us instinctively believe “equality” is a good thing. But there are times when inequality of income might be needed to increase supply of some desired occupations.
And, oftentimes, artificial scarcities are created to support incomes. In fact, many would argue, whatever the stated public benefits (safety, for example), most forms of professional licensing exist, in large part, to protect supplier incomes by creating scarcity.
In large part, the supply of physicians, nurses, and allied health professionals depends on whether the expected lifetime rewards exceed the costs and risks of entering the profession.
But "artificial" scarcity also seems to play a role.
In healthcare, those rewards include not only salary, but also job security, social prestige, autonomy, and meaningful work. Costs include tuition, student debt, years of education, opportunity cost, licensing hurdles, burnout, and malpractice risk.
The central question is straightforward: are the incentives large enough to justify the costs, and are training bottlenecks preventing supply from responding?
Also, are there institutional barriers that artificially create scarcity when abundance is preferred by policymakers and the public, if not desired by a particular industry?
In the United States, the answer is mixed:
Physician incentives are very strong, but supply is constrained by training bottlenecks that arguably are intentional
Nursing incentives are moderate, but worsening working conditions and burnout suppress supply
Technician and allied-health incentives vary widely, often creating shortages in specific specialties.
People choose healthcare careers when lifetime benefits are seen as greater than costs and other burdens.
Benefits might include:
Costs include:
When rewards rise, more people enter. When barriers rise, supply tightens. And some of those barriers arguably are intentional.
Physicians are among the highest-paid professionals in the U.S. Average annual earnings are about $350,000, with specialists earning substantially more, according to the National Bureau of Economic Research, NBER.
Other strong incentives:
Costs
Undergraduate degree (4 years)
Medical school (4 years)
Residency (3–7 years)
Often fellowship (1–3 years)
Student debt commonly exceeds $200,000
Delayed full earnings until early to mid-30s
The key issue is not lack of interest. There are many qualified applicants. The main constraint is the limited number of residency positions, many of which depend on Medicare-funded graduate medical education, according to NBER.
That scarcity is intentional, many say. The result is that:
Very high compensation persists
Entry remains restricted
Specialty choice is heavily influenced by income differences
Shortages occur in primary care and rural practice.
The picture for nurses is more nuanced.
Registered nurses typically receive:
Costs include:
2–4 years of education
Licensing requirements
Moderate student debt.
The primary issue is not educational cost but workplace issues:
Burnout
Shift work
Physical strain
Violence exposure
Staffing shortages.
Although nursing remains attractive, retention problems can cause shortages even when many people enter the field.
Related fields include:
Radiology technologists
Respiratory therapists
Laboratory scientists
Sonographers
Surgical technologists.
The incentives are:
Shorter training periods
Stable employment
Lower debt burdens.
The challenges include:
Compensation sometimes insufficient relative to specialized skills
Limited career advancement
Competition from alternative occupations.
The results include localized shortages where wages do not adequately compensate for required skills.
The point is that shortages do not necessarily mean compensation is too low.
They often result from:
Training bottlenecks
Geographic maldistribution
Specialty maldistribution
Burnout and early retirement
Regulatory restrictions.
Study | Year | Key Finding | Link |
National Bureau of Economic Research – Physician Competition: Entry and Substitution | 2026 | Residency caps and regulatory barriers continue to ration physician supply; mid-level providers expand more rapidly. | NBER paper |
National Bureau of Economic Research – Who Values Human Capitalists' Human Capital? | 2023 | U.S. physicians earn about $350,000 on average; earnings materially affect specialty choice and labor supply. | NBER paper |
National Bureau of Economic Research – How Does Provider Supply and Regulation Influence Health Care Market? | 2013 | Expanded NP and PA autonomy increases effective supply, especially in primary care. | NBER paper |
National Bureau of Economic Research – Relaxing Occupational Licensing Requirements | 2014 | Looser NP regulations reduce prices and expand hours worked by nurse practitioners. | NBER paper |
National Bureau of Economic Research – Migration Policy and the Supply of Foreign Physicians | 2023 | Visa waivers increase physician supply in underserved communities. | NBER paper |
Current Programs and Incentives to Overcome Rural Physician Shortages | 2023 | Loan forgiveness, scholarships, and service obligations improve rural recruitment and retention. | Springer article |
Medical Residency Subsidies and Physician Shortages | 2025 | Expanding residency subsidies increased primary care physician supply by roughly 4% in high-need areas. | Journal of Public Economics article |
The point is that to the extent “better healthcare” relies on provider supply, the U.S. healthcare system is understaffed.
Most of the discussion about the state of healthcare seems to focus on insurance. Much less attention seems focused on increasing incentives or decreasing barriers for the supply of healthcare professionals.
Profession | Financial Incentives | Training Costs | Main Constraint | Supply Outlook |
|---|
Physicians | Very high | Very high | Residency bottlenecks | Nationally attractive, but constrained |
Nurses | Moderate to high | Moderate | Burnout and retention | Cyclical shortages |
Allied Health | Moderate | Low to moderate | Uneven pay and capacity | Persistent specialty shortages |
Shortages seemingly occur because incentives are not fully aligned with the barriers to producing and retaining healthcare professionals.
